Competition Commission yesterday, divulge that it has been investigating a case of rand price manipulation.
The case revolves around price-fixing and market allocation in the trading of foreign currency pairs involving the Rand. The investigations started in April 2015, and now, the commission has referred the case to the Tribunal for prosecution.
The Commission found that from at least 2007, the banks had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US Dollar / Rand currency pair.
Also, it was found that the banks manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times.
In a media statement, the Commission said:
“Traders of the respondents (banks) primarily used trading platforms such as the Reuters currency trading platform to carry out their collusive activities.
They also used Bloomberg instant messaging system (chatroom), telephone conversation and had meetings to coordinate their bilateral and multilateral collusive trading activities.
They assisted each other to reach the desired prices by coordinating trading times.
They reached agreements to refrain from trading, taking turns in transacting and by either pulling or holding trading activities on the Reuters currency trading platform.
They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives.”
Based on the above, the Commission is seeking an order from the Tribunal declaring that the banks have contravene the Competition Act and thus, liable for the payment of an administrative penalty equal to 10% of their annual turnover.
Reacting, the Economic Freedom Fighters (EFF) urged the Tribunal to impose maximum sanctions provided for in Competition legislation in South Africa.
Also, the Fighters indicated that they will demand of the South African Reserve Bank to immediately discontinue the banking and operating licences of SA banks implicated.
“…We believe collusion around South Africa’s currency is treacherous and should be treated as such… the revealed scandal of the colluding banks must be dealt with decisively,” asserted the Fighters.
EFF also agitated that the South African government must “commence processes of establishing a viable, efficient and sound State Bank” which will insulate South Africa “from the callous thirst for maximum and immoral profits pursued by the existing banks.”
The party called on the South African government and all State institutions to disassociate from the banks implicated in the rand price manipulation case.
“The cowardice government must now illustrate to the banks that despite their systemically important financial position, they are not above the law and not beyond reproach.
“Most of these banks have been platforms for massive illicit financial flows, money laundering and corruption committed in South Africa and the entire developing world,” EFF stated.
Above all, Malema’s party promised that they will do everything they can to ensure that all the demands they tabled to government, Reserve Bank, and the Competition Tribunal regarding the rand price manipulation case, are fully implemented.